Corbett working to avoid more deep spending cuts

By Marc Levy

Associated Press

December 6, 2012

HARRISBURG – A top aide to Gov. Tom Corbett would not say Wednesday whether the governor will ask the Legislature for deep spending cuts when he presents a budget plan in February, but suggested that layoffs could be necessary to help offset rising costs for public employee pensions and Medicaid.

Budget secretary Charles Zogby said his office is trying to produce a plan that avoids deep spending cuts, but he said it is too early to say if that’s achievable. The governor makes his budget address to the Legislature Feb. 5.

“Well that’s what we’re going to try to see,” Zogby said after a round of mid-year briefings for legislators and reporters. “I think we’re working towards that. Whether it’s achievable or not, I guess you’ll have to wait till Feb. 5 to see.”

The Corbett administration anticipates the 2013-14 fiscal year, which begins July 1, will see $1.3 billion in rising costs for public employee pensions, prisons, debt and Medicaid, the state-federal health care program for the poor and disabled.

Corbett took a campaign pledge not to increase taxes or fees. So far, he has pushed through huge cuts in spending on education, social services and aid for the poor to balance two budgets that were complicated by sluggish tax collections and the winding down of the federal government’s multi-year recession bailout of the states. At the same time, Corbett has cut business taxes by hundreds of millions of dollars and expanded tax credits designed to advance his agenda for public school alternatives.

The nearly $27.7 billion budget for the 2012-13 fiscal year authorized a spending increase of about 1.5 percent, largely for debt, pensions and health care for the poor, as well as to help fill a shortfall in the previous fiscal year.

Zogby said his guidance from Corbett thus far is to balance the budget without increasing taxes. Tax collections are expected to rise slightly in 2013-14, and Zogby said he is considering tapping into other streams of money from outside the budget.

Meanwhile, Corbett has asked his agencies to keep administrative costs flat, which Zogby equated to an 8 percent reduction because of rising personnel costs. That directive makes it “probably unlikely” that layoffs can be avoided if enough employees don’t leave their jobs, he said.

“I think we look first to vacancies if we can, and agencies are going through all of that now,” Zogby said. But “potentially furloughs and layoffs may be the outcome in some areas of this spending restraint and cost-cutting efforts.”

Although Zogby did not address it, another major budget decision Corbett faces is whether to expand eligibility for adults under Medicaid as part of the 2010 federal health care law. The federal government would provide the lion’s share of the money for the expansion, but Corbett worries that the state could still see hundreds of millions of dollars in costs annually.

Public health and advocacy groups support the move, saying it would save money for the state on other costs, such as uncompensated care, while strengthening hospitals, health clinics and medical professionals.

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